Key gauges continue to trade higher in morning deals

Indian equity benchmarks continued to trade higher in morning deals, led by gains in banking, Telecom and Realty stocks. Sentiments remained up-beat with IT industry body Nasscom stating that the Union Budget 2022 sets the tone for India's 'techade' and establishing the country as a global hub in terms of technology innovation. Some support also came as Chief Economic Adviser V Anantha Nageswaran expressed hope that India would become a $5 trillion economy by FY26 or the next year on the back of 8-9 per cent sustained growth. He added gross domestic product (GDP) in dollar terms has already crossed $3 trillion. Traders overlooked Rating agency Moody's statement that the Union Budget lacks any tangible measures to increase revenue generation even though the capital expenditure plans have gone up significantly and the fiscal deficit estimate suggests that the government is relying too much on strong growth to help drive fiscal consolidation.

Asian markets traded in green with most of the markets in the region closed for Lunar New Year holidays, following the broadly positive cues overnight from Wall Street, as strong gains are seen in the energy and materials sectors amid higher commodity prices traders. Back home, on the sectoral front, there was some reaction in power stocks as the power ministry data showed that India’s power consumption grew marginally at 2.6 per cent year-on-year in January to 112.67 billion units (BU), showing the impact of local restrictions imposed by states amid the third wave of COVID-19. Power consumption in the entire January last year was 109.76 BU, which was 4.4 per cent higher than 105.15 BU in January 2020.

The BSE Sensex is currently trading at 59382.66, up by 520.09 points or 0.88% after trading in a range of 59193.05 and 59441.72. There were 26 stocks advancing against 4 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 1.08%, while Small cap index was up by 1.38%.

The top gaining sectoral indices on the BSE were Bankex up by 1.58%, Telecom up by 1.04%, Realty up by 1.00%, Consumer Durables up by 0.98% and Consumer discretionary up by 0.96%, while there were no losing sectoral indices on the BSE.

The top gainers on the Sensex were Bajaj Finserv up by 3.92%, Indusind Bank up by 3.79%, Bajaj Finance up by 2.80%, Axis Bank up by 2.68% and Kotak Mahindra Bank up by 2.43%. On the flip side, Tech Mahindra down by 3.59%, Ultratech Cement down by 0.23%, Hindustan Unilever down by 0.21% and Sun Pharma down by 0.17% were the top losers.

Meanwhile, rating agency Moody's said has the Union Budget lacks any tangible measures to increase revenue generation even though the capital expenditure plans have gone up significantly and the fiscal deficit estimate suggests that the government is relying too much on strong growth to help drive fiscal consolidation. The agency stated the budget underscores government's previous emphasis on capex to sustain near-term recovery from the pandemic, while simultaneously paving the way for longer-term restructuring of the economy.

However, Christian de Guzman, a senior vice-president, sovereign risk group, Moody's Investors Service, said the various spending initiatives are not offset by any significant announcements related to further increase revenue generation; rather, the announced revenue-related measures are aimed at other objectives such as fostering startup innovation, ensuring more equitable treatment for cooperatives and state employees, and promoting tax compliance through simplification.

On the fiscal consolidation front, he said the target for the central deficit to narrow to 6.4 per cent in FY23 from a 6.9 per cent in FY22 suggests government is relying on strong growth to help drive fiscal consolidation in light of the large bump in capex, which is up by 35 per cent for the next fiscal and this poses some uncertainty given the prevalence of the pandemic-related risks.

The CNX Nifty is currently trading at 17734.75, up by 157.90 points or 0.90% after trading in a range of 17674.80 and 17749.00. There were 44 stocks advancing against 6 stocks declining on the index.

The top gainers on Nifty were Bajaj Finserv up by 3.94%, Indusind Bank up by 3.71%, Bajaj Finance up by 3.24%, Kotak Mahindra Bank up by 2.85% and Axis Bank up by 2.80%. On the flip side, Tech Mahindra down by 3.64%, Adani Ports &SEZ down by 0.39%, Britannia Inds down by 0.34%, Sun Pharma down by 0.33% and Ultratech Cement down by 0.32% were the top losers.

Asian markets traded in green; Nikkei 225 surged 471.47 points or 1.74% to 27,549.95 and Jakarta Composite soared 75.22 points or 1.13% to 6,706.37.